The Q2 OCTG Situation Report: No Quarter Left Behind
When it comes to wealth every ‘quarter’ counts. It’s no different in the oil patch where our subscribers count on our exclusive quarterly OCTG Inventory Surveys to provide them with a wealth of information-based knowledge about the health of the upstream market by measuring demand for OCTG. For this, we survey the entire supply chain including truck terminal, mill, processor, and inspection yards throughout the lower 48. Our tally for the period ending June 30, 2020, reveals L48 “prime” OCTG inventories yielded to the unrelenting market forces rising 4%.
Since the situation could have been far worse, we credit the restraint in inventory builds to the domestic mills that turned on a dime in responding to the unimaginable twin threats in March; making the grueling decisions to retrench and adjust production accordingly. Others took a more strategic approach and built manageable inventories in order to position themselves from on and off manufacturing schedules.
Inventory builds were recorded in every product category throughout the tri-state in Q2. Full details of the size and scope of the inventory build can be found in this month’s OCTG Situation Report. A sizable amount of the upstream tubulars inventory documented at the end of June was a result of ballooning import shipments that were on the water when the market buckled in March. By the time these shipments arrived they were virtually homeless.
Now that we’ve been able to fill in a number of blanks in our 2020 forecast by way of our quarterly survey, it’s apparent that the concerted efforts to curb inventories over the past quarters will put suppliers in a slightly better (dis)position to weather the murky market. If only that was enough to keep months of supply from caving as we move into the back half of the year. We discuss our expectations for this and a multitude of related metrics in our July market intel.
As we come to the close of what might be termed the ‘muddle’ of the year and wonder aloud what’s the best way forward, our money’s on the ancient Greek philosopher Socrates who said, “The secret to change is to focus all of your energy not on fighting the old, but on building the new.”
NOTE: Our monthly blog posts offer a slice of the content we publish in The OCTG Situation Report® every month. To subscribe and/or request a complimentary copy of our Report for review please visit: https://www.octgsituationreport.com/subscribe